(Bloomberg) -- Olympus Corp. pushed out its chief executive officer after investigating an allegation he purchased illegal drugs, a stunning exit for the German native after less than two years at the helm.
The company’s shares declined more than 7% Monday, the biggest intraday slide in almost three months, after it said Stefan Kaufmann had resigned all positions effective immediately. Olympus, best known as a designer of cameras and imaging gear before a pivot into medical equipment such as endoscopes, wouldn’t comment further on the case, citing an ongoing investigation. Kyodo News reported that Japanese police were conducting their own probe.
The 56-year-old Kaufmann presided over a roughly 18% stock price climb over his tenure. But that was just about half the gains the benchmark Topix index managed over the same period. Chairman Yasuo Takeuchi will act as Olympus CEO in the interim.
The board unanimously determined that “Kaufmann likely engaged in behaviors that were inconsistent” with the company’s code, values and culture, according to an Olympus statement. As a result, he was asked to resign, it said.
Kaufmann didn’t respond to messages on LinkedIn seeking comment.
The allegations surrounding Kaufmann, one of the few foreigners running a blue-chip Japanese company, remain unclear. The country has strict laws governing the use and import of drugs.
This isn’t the first time that a Japanese company executive has faced a probe over suspicion of illegal drug use. In 2015, Julie Hamp, then a Toyota Motor Corp. media adviser, resigned after her arrest over import of pain medication into Japan without approval. However, she was let go after prosecutors didn’t bring any charges against her, and Hamp rejoined the company in 2022.
If Kaufmann is found to have broken any laws, Olympus could face a reputational hit.
“Olympus provides precision medical equipment and instruments, an industry where perfection is highly valued. If it’s true that the CEO resigned over the purchase of illegal drugs, this could damage its image,” said Bloomberg Intelligence ESG analyst Yasutake Homma.
The Kaufmann episode marks the second time Olympus has removed a foreign-born leader.
In 2011, it fired former CEO Michael Woodford mere weeks after the British native ascended to the top job. Woodford told media he suspected he got the sack because of inquiries he made into previous accounting.
Olympus in August cut its full-year operating income forecast. The Japanese company has struggled with inconsistent growth in past years.
“While the news is regrettable, we believe the firm acted properly after it received the allegation,” Citigroup analysts wrote in a research note, adding that they judged any fallout would be contained. “The nominating committee will apparently consider all options for the successor as CEO, but we think the best option would be for Mr. Takeuchi, who spearheaded the Transform Olympus initiative, to lead the company as CEO.”
--With assistance from Natsuko Katsuki.
(Updates with efforts to reach Kaufmann for comments in the fifth paragraph, and additional context.)
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